Greek Riots Stun Athens

The city of Athens has been shocked by a violent outbreak of Greek riots in which 3 are left dead as protesters and police clash. Proposed spending cuts to rein in Greek government spending ahead of a much needed bailout touched off the protests and rioting. Greece will need to get their house in order before any instant cash from a bailout can be made accessible.

Greek riots after protests of austerity measures

Sunday, Prime Minister George Papandreoun proposed a spending bill that would tighten the nation’s belt, and it led to agitated protests and also the later Greek riots. The budget deficits and financial turmoil have led to the downgrade of the credit rating of Greece. The proposed spending agenda would cut 30 billion Euros over the next few years. As outlined by MarketWatch, the cuts would amount to about 11 percent of Greek gross domestic product.

What will be affected?

About 75 percent of total public spending in Greece goes to pensions and public sector wages. Greece employs more people publicly than most other European nations. As well as cuts to wages and pensions, an increased value added tax on consumer goods such as alcohol and cigarettes is also integrated.

Bailouts

European Union nations and the International Monetary Fund are assembling a 110 billion Euro bailout package. Over 22 billion Euro has been pledged by Germany and Chancellor Merkel alone. She has been hesitant, and believes an instant bailout would wasted if reform isn’t in place first. The bailout is unpopular with the German public, though the President of the Bundesbank (central bank of Germany, similar to the Federal Reserve) Axel Weber has supported the bailout, as not doing this could contaminate other European markets.

Strikes preceded Greek riots

After the Prime Minister announced his proposed spending budget revisions, which are expected to very easily pass as his party (Socialist) holds a 160-seat majority, a nationwide general strike started in protest of the cuts, as outlined by the Wall Street Journal. No ferries ran, schools closed, shopkeepers locked their doors, lawyers and doctors all took to the streets in protest. Hospitals ran on the barest minimum staff, and all flights in or out of Greece were grounded. Further protests are due to take place.

Resources

MarketWatch

http://www.marketwatch.com/story/greeks-go-on-strike-against-austerity-measures-2010-05-05

Wall Street Journal

http://online.wsj.com/article/SB10001424052748703961104575225472577513414.html?mod=fox_australian